A Duopoly of Convenience: Facebook & Google Tap New Growth in APAC

Latest data reveals that in Q1 2018, Facebook and Google ad revenue grew by 40% year-on-year across Asia Pacific (ex. China), while ‘The Rest’ – every publisher and ad tech business outside the duopoly – saw a fall in revenue of 20% over the same period.

Looking at the top-line, digital advertising is experiencing strong growth across APAC, with ad spend up $0.85 billion year-on-year in 2018. But it’s clear that while many publishers and ad tech businesses are still growing, in reality that additional $0.85 billion revenue is comprised of $1.63 billion more for Google and Facebook, and $0.78 billion less for everyone else.

As a result, Facebook and Google revenue hit 65% of APAC total digital revenue, up from 51% in Q1 2017. This means twice as much budget goes to the duopoly as every other digital publisher and ad tech platform in the region put together.

From a global perspective, Facebook and Google have been strengthening their hold over digital advertising budgets for several years. Asia Pacific has actually seen a slower shift in spend than the US or Europe, where Google and Facebook already account for 80% of digital ad revenue.

Human beings have long sought means to make our lives easier. From earliest times with the invention of the stone hand axe, to the swarms of gig economy apps which today get people to clean your apartments, drive you around, do your shopping or deliver you just about anything you can think of, at the touch of a smartphone screen, convenience has been the driving force behind much human-made ingenuity. Most of us in the modern world now expect gratification to be on-demand.

New ways of offering services to customers have significantly changed how organisations and companies operate and compete in all markets. So it is no surprise that the age of convenience has come to our industry. What Uber did for transportation, Netflix for TV, and AirBnB for accommodation, Google and Facebook have done for marketing. And they are justifiably reaping the rewards.

In the on-demand era, there is only one guarantee: money flows to those who offer – or at least appear to offer – the comfort of convenience. This is the inconvenient truth.

Notes

As per last year, numbers are based on Facebook and Google publicly filed earnings information and best industry advertising revenue estimates via the IAB, Zenith and Emarketer among others – but someone out there may have a better view, so corrections welcome. The major assumption in this data is to exclude Chinese advertising spend from Google and Facebook earnings information and APAC industry spend estimates. This is to avoid distorting the data by including a market where Facebook and Google have small (although not insignificant) advertising businesses. All the data is available on a public Google sheet (yes, sorry, it’s Google!) here.